AMC Networks sees sharp stock price fall following 30% Q4 revenue decline
AMC signed a licensing deal with WBD for several shows including Dark Winds
AMC Networks’ revenue declined 30% to US$678.9m in the fourth quarter, compared to US$964.5m a year ago, as a slight improvement in its direct-to-consumer (D2C) segment was not enough to offset a steep 23% drop in advertising revenue and other declines in content licensing and linear.
The New York-headquartered company, which operates cablenets including AMC, IFC Films and Sundance TV and streaming services AMC+, Shudder, Acorn TV and others, added 300,000 streaming subs in the quarter for a total of 11.4 million. The subscriber growth helped push streaming revenue up 4% to US$145m for the quarter.
However, the company saw declines across other areas of its domestic operations. Subscription revenue from its linear channels fell by 8% to $327m, while content licensing revenue dropped 68% to US$96m. The decline in licensing revenue was due in part to an unfavourable comparison to the same quarter last year, when AMC Networks delivered the AMC Studios-produced series Silo to Apple TV+.
Since the appointment of Kristin Dolan as CEO a year ago, the company has significantly cut costs and that showed in the earnings report, with year-on-year losses narrowing to US$11.4m in the fourth quarter, compared to US$391.4m the prior year.
For fiscal year 2023, revenue was down 12% to US$2.71bn versus US$3.09bn the year prior, but profit increased to US$388.4m in 2023 from US$86.9m in 2022. Within that, streaming revenue for the year increased by 13% to US$566m.
Following the release of its earnings report and subsequent investor call, the company’s share price fell sharply. After opening the day at US$16.65 per share, the stock dropped 13.5% to US$14.41 by the end of trading.
After hitting a low of around US$10 per share in September, the stock had rebounded to more than US$20 by mid-December. Since the turn of the year, the stock has fallen slightly to around US$17 per share prior to the substantial drop on Friday.
Dolan opened the investor call by seemingly playing down the prospect of M&A activity for AMC Networks in the short term. “From our perspective, we see strength in being nimble and independent and value the flexibility this provides us in the marketplace. We have opportunities that are frankly not possible for non-vertically integrated programmers who are tied to broadcast networks, or large distribution businesses. We truly can dance with anyone and are enthusiastic about using the structural advantage that comes with its independence to better serve viewers and our commercial partners.”
During the year, AMC Networks signed a short-term licensing deal with Warner Bros Discovery (WBD) that saw prior seasons of several shows including Fear the Walking Dead, Killing Eve, A Discovery of Witches and Dark Winds streaming on Max.
During the investor call, Dolan reiterated that the partnership was beneficial to both parties and it remains in discussions with a “wide variety of potential partners.”
More broadly, she emphasised the need for companies to bundle products to keep prices lower and meet the needs of consumers more effectively.
“We really do need to make things easier and more cost effective for our customers. The current environment is confusing, expensive and essentially forces consumers to recreate the cable bundle on their own as far as the price,” she said.
Dolan cited the recently announced sports joint venture between Disney, WBD and Fox as an example of “new thinking” around bundling products. “I believe this industry will continue to find new approaches that will better serve consumers, distributors and content companies,” she said.